Asian Paints, the country's largest paint manufacturer, has decided to divest its stake in its Australian operations.
The company informed the Bombay Stock Exchange that it has entered into a share purchase agreement to offload its stake in Asian Paints (Queensland) Ltd, held by its wholly owned subsidiary, Asian Paints (International), Mauritius. The offer is, however, subject to due diligence and other requisite approvals.
A company spokesperson said the operations in Queensland were small and not expected to make any significant impact in the company's performance.
Compared with Asian Paint's revenues of Rs 3,700 crore in the last financial year, the Australian unit fetched only Rs 15 crore, he added. "The market is too small to own an operation," added an analyst.
However, the international strategy will remain to operate in that country to serve existing markets in the region, added company executives.
Analysts reason that even though the paint company has presence across 22 countries, the business tends to be fragmented and the local markets have their own leaders.
Despite competition, it leads in 10 countries - Bahrain, Barbados, Fiji, Jamaica, Nepal, Samoa Islands, Solomon Islands, Tonga, Trinidad & Tobago and Vanuatu.
Also, Asian Paints has in the past acquired loss-making units and have successfully converted them in to profitable units. The largest acquisition was of Berger International in Singapore in September 2002.
This move gave Asian Paints access to 11 countries where Berger has operations. Berger International currently accounts for around 70 per cent revenues of Asian Paints' overseas operations.